Development for the game started as a Sonic The Hedgehog fangame, but Stephen DiDuro, the lead designer, lost interest in creating derivative work and reconceived the project as his own intellectual property. After recruiting Chinese artist Ziyo Ling from DeviantArt, DiDuro replaced the existing cast of characters with her own.

Lilac was originally conceptualized as a hedgehog, as she was Sonic's replacement. However, DiDuro wanted to distance the game's appearance as a Sonic fangame and redesigned her as a dragon. Lilac's wall-jump ability was based on a similar game mechanic from Ristar.

Holding down the special attack and down directional buttons whilst advancing through cutscenes will trigger either a blooper or humorous alternate dialogue during certain moments.

Brevon's design was inspired by the character General Roth'h'ar Saris from the 1999 film Galaxy Quest.

The developer thought about adding super forms for the characters during the very early stages of development, but decided against it as they would make the gameplay too imbalanced.
The closest thing to them in the final game are the rings in Pangu Lagoon that give Lilac a second midair boost.

The hardest level for the developer to design was Sky Battalion, as there were a lot of situations on the airships that were difficult to figure out in terms of making sure Lilac, Carol and Milla could navigate through them. Not only that, but the stage has four mini bosses instead of one and the end boss was particularly tricky to animate.

The most fun level to design was Fortune Night with its gimmicks and had the developer's personal favourite boss in the game.

The developer originally wanted to add alternate outfit colours for the characters that would have been unlocked gradually through play, there was even going to be an option to customise both Carol's scarf and motorcycle colours.
But a problem with the software used to develop the game meant that swapping the colours of the characters at runtime caused graphical glitches, so it was ultimately cut.

There were plans to include an editor mode for the Sheng Mu Academy where players could create their own maps/challenges, but it was scrapped for having too many bugs.

Despite originating as a Sonic The Hedgehog fan game, the title did not have any official Sonic characters in it at any point, including Sonic. The only Sonic element that existed in some form were rings, which were soon replaced with the life petals and crystal shards.

The switch to an original game was made very early on when the physics engine was still being altered and everything was drawn as boxes and circles.

Lilac’s Treehouse was originally meant to serve as a hub area where the player could save their progress and look through special items they had collected.

Originally, collecting five of the keystones dropped by enemies would reward a specific elemental shield depending on what color keystone the player had the most of.

The elements of the games shields are based on the Wu Xing, the Chinese "Five Elements" comprised of Wood, Fire, Earth, Metal and Water.

During auditions for the game, Lilac’s eventual voice actress Dawn M. Bennet auditioned for her unaware of the fact that the games’ creator Sabrina DiDuro planned on looking for actresses to play Lilac herself.
But Sabrina was so impressed by Dawn’s audition that she decided to cast her for the part.

The Tankbot enemies found in Thermal Base were actually based off an early design concept for Syntax.

The chanting heard in Act 1 of Relic Maze was done by Lilac's voice actress, Dawn M. Bennet.

The Ninja Hurk poster in Lilac's Treehouse was put in as nod to the Marvel character The Incredible Hulk, who Lilac's voice actress Dawn M. Bennet is a huge fan of.

The reason all 3 phases of the final battle with Brevon were given health bars (the first two subtly indicated by the two pillars in the background) was due to it being hard to gauge how close it was to defeating them, as well as their difficulty.

Hidden in the games files is a message from Lilac & Carol to encourage anyone who pirated the game to donate to their official website.

The second playable character was originally an unnamed black cat with blonde hair. However, the games creator Sabrina Diduro got permission from Ziyo Ling (the original creator of Lilac, Carol and Milla) to use Carol and Milla in the game. Afterwards she drew Carol over the old character's sprites.

Lord Brevon was originally created as a Neopets fan character by Freedom Planet's creator, Sabrina DiDuro, back when the website was originally geared towards university students and had more "serious" fantasy themes. When Neopets was acquired by Viacom in 2005 and started focusing on more kid-friendly content, DiDuro felt the character did not fit in with the rebranding of Neopets and decided to develop Brevon into a fully original character.